# How to Calculate VAT

by Kevin
(Pretoria, South Africa)  Q: How do I calculate the VAT included in the debtor and creditor control accounts?

A:
Control accounts for debtors and creditors are the full amounts including VAT (Value-Added Tax) that are owed from one party to another.

Assuming VAT is 14%, to calculate the
VAT portion you take the total of debtors or creditors and multiply by 14/114.

So, for example, if our total debtors amount owing to the business is R228 (228 Rand - South African currency), then we do the following:

R228 x 14/114
= R28

The actual sales figure here - excluding VAT - could be calculated in 2 ways:

1) We could just take the total of the debtors, which includes VAT, and subtract the VAT figure we just calculated:

R228 - R28
= R200

2) Or we could take the total debtors figure and multiply this by 100/114:

R228 x 100/114
= R200

Hope that helps and that you now understand how to calculate VAT!

And see below in the comments for a few more questions I answered with examples of calculating VAT...

Best,
Michael Celender

Related Questions & Tutorials:

### Comments for How to Calculate VAT

 VAT Inclusive Calculation Question by: Anonymous What is the amount of VAT if the cost of the suit is R85,500 (VAT inclusive)?R85,500 x 14/114= R10,500That's assuming a VAT rate of 14%.If it's 15% or some other number, it's x 15/115. Etc.Best,Michael C.Founder of Accounting Basics for Students

 Calculate selling price and the VAT by: Anonymous An item with a selling price of R234.50 ex VAT , was sold. Calculate both the full selling price and the VAT portion of the sale?Appreciate your assistance.Let's assume VAT = 10%Start with the VAT portion, that's the simplest:= R234.50 x 10/100= R23.45Now the full VAT-inclusive selling price:= R234.50 + R23.45= R257.95Hope that helps!- Michael Celender

 Finance Manager - Calculate Revenue from VAT Output by: Tso Kg Please assist I have vat output of R630,902.10 I need to determine the revenue.A: Let's say the VAT rate = 15%VAT Output = Revenue x VAT rateVAT Output = Revenue x 15%So switch things around in the formula and we get:Revenue = VAT Output / 15%Revenue = VAT Output / 0.15Revenue = R630,902.10 / 0.15= R4,206,014Hope that makes sense.- Michael Celender

 inclusive and exclusive tax by: arun from india What do you mean by inclusive tax and exclusive tax? Can someone please give me a brief example of my question. THANK YOU Inclusive tax is referring to an amount that includes the VAT.For example, debtors or creditors. Or the full cash paid for a purchase (including VAT). Or the full cash received for a sales (including VAT).Exclusive of tax refers to the actual sales figure or purchases figure - which excludes VAT.For example, Joe sells goods for \$110 including VAT. He receives \$110 in cash. This is the inclusive amount - includes VAT in it.The actual sales figure will exclude VAT. In this case it will be \$100.The VAT is \$10. It's at a rate of 10% in this example (\$10/\$100 sales value).FYI usually they will give you the VAT rate in the question. You just have to calculate either the exclusive or inclusive figure.Hope that helps!- Michael

 Vat by: Anonymous Good Day,I charged a vat inclusive hourly rate of R550/hr for consulting fees which totaled R88,000 for the month (inclusive). What amount do I use as my basic salary for my payslip, R88,000 or R88,000 excluding vat (R77,192)?Your business will have to pay VAT over to the tax authorities so this VAT amount doesn't really belong to you as a salaried employee. The business should just be collecting it and then paying it over. The VAT amount should therefore not be included in your salary (the money paid to you). So I would use the excluding vat figure of R77,192 as the salary figure for your payslip.Hope that helps.- Michael

 VAT by: Anonymous Monde sold a pair of shoes for R547,20, inclusive of VAT at 14%. if his mark-up percentage as a percentage of cost is 25%, what is the cost price of the product?

 Gross profit earned by: Anonymous Hi,If I'm given an exclusive cost price per unit of R2,104, and the inclusive price is R2,398.56, and the markup percentage is 60%, do I calculate the gross profit earned with or without VAT?I know how to do the calculation, I'm just not sure if gross profit includes or excludes VAT.Also, how is a gross margin percentage calculated with the figures given above?Thank you in advance!Gross profit is made up of Sales and Cost of Sales.And Cost of Sales = Opening Inventory + Purchases - Closing InventoryAll these things I just mentioned above - every single one of them excludes VAT.So short answer - gross profit always excludes VAT. You need to calculate gross profit without VAT.On your 2nd question, I'm not 100% sure about gross margin percentage but I think it's as follows:Calculate the sales price first:= Cost Price + 60% mark-up= R2,104 + (R2,104 x 60%)=R3,366.40Gross margin percentage:= (Difference between the Sales figure and the Cost) / Sales Figure= (3,366.40 - R2,104) / R3,366.40= 0.375= 37.5%That last one about calculating gross margin percentage is a tough one!Hope that helps!- Michael CelenderAccounting Basics for Students

 Great help God bless you by: NUKhan Regarding VAT it is a real refresher.Thanks for sharing.Welcome!

 Calculating VAT by: Anonymous What is the reason for adding the 10% to the actual value of goods when calculating VAT?Because the 10% IS the VAT.The 10% IS the rate of Value Added Tax.The actual value of goods (inventory, purchases, any assets) always excludes VAT.You add VAT because the business has to charge VAT on its sales. The full amount collected in cash is the value of the goods PLUS the VAT added to this.Hope that makes sense!- Michael

 Rep. of South Africa VAT by: Anonymous For services rendered on an invoice to a client what would the VAT amount be on R1960 (Rands-South African currency) of 14%?If R1,960 is the full amount on the invoice, then this is the figure INcluding VAT.So you do this:R1,960 x 14/114= R241Make sense?- Michael

 Help by: Anonymous If I have the item price and selling price how do I work out the percentage?

 VAT Calculation in very Simple Way by: Chris To put it is a very simple way.Item price: 4,954VAT: 14%To get the total amount all you have to do is:Convert the percentage rate to a decimal number- 14 divided by 100 = 0.14 (or simply move the decimal point 2 places from right to left)Then- Multiply the item price by the VAT decimal amount (4,954 X 0.14 = 693.56) 693.56 is 14% of 4954Then- Add the item price and the VAT amount (4954 + 693.56 = 5647.565647.56 is the total cost of the item including the VAT____________________________________________The key here is to know how to convert the percentage rate to a decimal number which is very simple (you just need to move the decimal point 2 places from right to left)That means: 23% is 0.23 2% is 0.02 10% is 0.1 1% is 0.01 38% is 0.38As simple as that!Great comment Chris! Thank you!

 Inclusive and Exclusive by: Boitumelo Hey guys I have some few questions on till slip The total item R498.93.1) Calculate the amount payable including 14% vat 2) What is the total amount exclusive jurisdiction of Vat

 VAT Including or Excluding by: Anonymous How do I know when to use 14/114 if VAT is 14 percent?Use the 114 figure when you're starting from the inclusive figure (cash received, debtors amount, creditors amount, etc.).- Michael

 confussed by: Anonymous You say assuming vat is 14% what do you mean by assuming. The fact is vat is 14%.VAT rates change sometimes. Also VAT exists in different countries, not just in one country. Some countries have something similar and call it a sales tax. In South Africa VAT is 14% (I think) but it's different rates in other countries that have VAT or a sales tax. Best,Michael Celender

 VAT only by: Anonymous HiIf I only have the VAT amount eggs R1356.52, how do I calculate the exclusive and inclusive amounts. 10% is easy as you only move the dot, and 5% will always be half of any 10%.Tx 10% is actually not always so easy but definitely easier to calculate than say 14%. I'm assuming 10% is the rate and that R1356.52 is just the VAT on the eggs, I hope I understood that right.Exclusive amount is 100/10 X R1356.52. The full inclusive amount is 110/10 X R1356.52.- Michael Celender

 VAT Rate by: Anonymous If I purchase a pen, excluding VAT (at a rate of 14%), is R75. Then the VAT is...Then the VAT is R75 x 0.14 = R10.50- Michael Celender

 VAT Question by: Anonymous The advocate charged R975 VAT exclusive but here I get R1,111.50 VAT inclusive. Now my question is how did we get that R1,111.50 answer?VAT is based on the R975. If VAT is 14% then it's 14/100 of the R975. We can calculate VAT by saying 14/100 X R975 = R136.50. R975 + R136.50 = R1,111.50.Or an even quicker way of solving this is to simply say: 114/100 X R975 = R1,111.50Hope that helps!Best,Michael Celender

 Question by: Anonymous If my VAT rate is 14% and I have purchase price of 48,000 as my Net Price, I understand my Gross price will be 54,720 (48,000 X 1.14 = 48,000). On my study guide there is 6,720. How was this 6,720 derived?Net purchase price 45,000 + 3,000 = 48,000add VAT at 14 % (then it says) 6,720Total purchase price = 54,720I believe the 6,720 was derived from 48,000 X 14%.Best,Michael Celender

 Calculate VAT by: kuhle the total is 318.59

 Excluding VAT by: Anonymous Hi I would like to know how much would I have to cough out if I want to buy a device that cost 1750 excluding, and how much is it when vat included?You do 1,750 x (100+VAT rate)/100.E.g. the VAT rate is 15% so you do 1750 x (100+15)/100 = 2,012.50- Michael Celender

 Vat by: PG Which is the correct way to do vat is it times 14divide 100ORtimes 14divide 114

 VAT CALCULATION by: Anonymous total amount is rs 468.00 it is including vat. but my question is that 468 x 13.5% is not equal to 468 x 1.135 how it calculate.

 How to Add On VAT by: Rozzi add 14% vat to your net amount7500. x 1.14 = 8 550.00 gross amount/incl checkgross amount less net amount = vat 14%8 550. - 7 500. = 1 050. vat amountoryou have the vat amount and need to find net amount100/14 x 1 050. = 7 500.net amount/excloryou have gross amount8 550. / 1.14 = 7 500. net amount/excl

 Work out the purchase or sale amount using the VAT amount by: Edward To work out the VAT backwards, say you know how much the VAT was, but you don't know what the sale or purchase amount is, you do this:Say the VAT amount paid was R5,000.00Take R5,000.00 and times it by 114, then divide it by 14. So R5,000.00 x 114 ÷ 14 = R40,714.28Which means the amount you paid for it was R40,714.28

 Calculating VAT Backwards by: Michael Celender The total you pay is always the 114 part of the equation I mentioned above. In other words, it is the 100% paid for the product plus the additional 14% VAT added together. When we go backwards from the total paid to find the VAT we do the following:14/114 X Total Paid=14/114 X R72,514.34=R8,905.27

 How Do I Calculate VAT Backwards by: Bev How do I calculate backwards...what's the VAT I paid on total of R72,514.34?

 If only VAT amount is known by: Anonymous How do I calculate the inclusive/exclusive price if only the VAT amount is known? E.g. I know I was charged 50 VAT, what is the VAT inclusive price? And VAT exclusive price?

 VAT on 7500 by: Michael Celender If the R7,500 is the full price of the product or service, you get the VAT like this:R7,500 X 14/114 = R921If the R7,500 is the price before adding VAT, then you work it out as follows:R7,500 X 14/100 = R1,050In the last option above, the total price of the product or service including VAT comes to R8,550 (R7,500 + R1,050)

 VAT manually by: Anonymous Hi all, need assistance. How do I step by step work out vat manually on paper? Going for an interview and I need a crash course.

 vat calculating by: Anonymous like 7500, how do I put a vat n get a correct answer.